Scramble to Back Port Deal: Making of Political Disaster

By ANNE E. KORNBLUT

Published: February 25, 2006

CORRECTION APPENDED

Carol M. Browner and Thomas J. Downey, a classic Washington power couple, are not used to being rebuffed. But that is what happened when those two Democratic advisers approached Senator Charles E. Schumer last week about their client, Dubai Ports World.

Days before, Mr. Schumer, Democrat of New York, had issued an early complaint about the deal to put several American ports under the control of Dubai Ports World, owned by the United Arab Emirates. Mr. Schumer demanded to know what would protect the United States ''if a terrorist organization decided to infiltrate this company.''

Initially, the question seemed like a bump that could be handled with a few calls to the senator. Instead, it snowballed into a political disaster, one that has become a paradigm of failed crisis prevention here. It has also spawned bizarre alliances, putting President Bush on the same side as two former members of Bill Clinton's cabinet and at least briefly pitting former Senator Bob Dole against his wife, Senator Elizabeth Dole, Republican of North Carolina.

On Feb. 14, after Mr. Schumer's initial protest, Ms. Browner and her colleagues at the lobbying business, the Albright Group, began to conduct outreach for Dubai Ports World, which they were already advising on questions involving China.

Ms. Browner, administrator of the Environmental Protection Agency in the Clinton years, naturally turned for help to Mr. Downey, a former Democratic congressman who is her companion and a major New York supporter of Mr. Schumer.

Mr. Schumer would not budge. Refusing to meet the two in person, he made public objections.

Soon a confluence of forces, including a lack of preparation by the administration, little major news and the fact that members of Congress, who had not been briefed on the questions, were at home in their districts, helped the controversy explode.

The ordeal, tamped down somewhat by the announcement late Thursday that the company would not take control of the ports immediately, has offered a case study in crisis management.

''They couldn't have botched this any worse if they had tried,'' said Rich Masters, a managing director at Qorvis, a business that has worked on crisis communications for Arab countries. ''They should have met with members of Congress three or four weeks ago and said: 'This is a good deal. We've vetted the security on this, and we absolutely should move forward,' and should have gotten them all on their side before it became this huge deal.''

Lawyers and lobbyists at Alston & Bird, the big law firm based in Atlanta, put together the commercial deal for Dubai Ports, quietly helping win approval from the Committee on Foreign Investments in the United States of the $6.8 billion acquisition of the Peninsular & Oriental Steam Navigation Company, the British company that has contracts to manage several United States ports.

No one, it appears, mapped a strategy to break the news to Congress that the country where two Sept. 11 attackers were born would be running ports here, an obvious thicket, even if it posed no real security risk.

As the rumblings in Congress grew, Representative Peter T. King, the New York Republican who is chairman of the House Homeland Security Committee, joined forces with Mr. Schumer.

Dubai Ports signed Mr. Dole, who works at Alston & Bird as a lobbyist. Almost simultaneously, Mrs. Dole wrote a letter to the chairman of the Senate Armed Services Committee, John W. Warner, Republican of Virginia, voicing concerns about the transfer.

On Thursday, Mr. Dole issued a statement saying he had registered as a lobbyist just to consult with members of the administration, not Congress.

''I have not nor will I 'lobby' members of Congress on this issue, not even at home,'' Mr. Dole said. ''I have not discussed the port issue with any senator or member of Congress or anyone working for the Congress, nor will I do so in the months to come. I will of course do my best to help the American people understand the real facts.''

At another point, Ms. Browner contacted Joe Lockhart, a press secretary for President Bill Clinton, about taking up the Dubai Ports cause. That arrangement would have added an even more unusual alliance. But Mr. Lockhart said he declined.

Strategists across town have marveled at the mismanagement of the transfer, placing most of the blame on the administration for failing to recognize the potential for danger. One explanation is that to some administration officials the deal may have seemed routine. Several people involved had worked with Dubai Ports and might not have seen the transfer as provocative.

In particular, David C. Sanborn, nominated last month by Mr. Bush to run the Maritime Administration at the Transportation Department, had previously run Dubai Ports operations in Latin America and Europe.

Treasury Secretary John W. Snow, whose department gave the transfer a green light, formerly headed CSX, the transportation company that sold its port operations to the Dubai company in 2004.

At the same time, administration officials would have been disposed in favor of a contract with Dubai if they believed that it would help secure a free trade agreement with the emirates that is in negotiations.

But that, strategists said, is little excuse for the public relations disaster.

''It is less logical to blame Dubai than it would be to say that the administration was asleep at the switch,'' said Jeffrey Garten, former dean of the Yale School of Management. ''What makes us think that foreign entities would have a real sensitive sense of American public opinion or Congressional sentiment?''

Correction: March 2, 2006, Thursday
Two articles on Saturday about the management deal for six American ports and its political fallout referred incorrectly to the role to be played by Dubai Ports World. It would run some of the terminal operations; it would not own the ports or take over all operations.